| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 Asia Economy


How to use our RSS feed

Follow Finfacts on Twitter

Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.


Finfacts is Ireland's leading business information site and you are in its business news section.


Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News


Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News




Content Management by interactivetools.com.

News : Global Economy Last Updated: Jan 2, 2014 - 6:45 AM

Corporate tax reform and the biggest tech tax havens
By Michael Hennigan, Finfacts founder and editor
Dec 31, 2013 - 7:12 AM

Email this article
 Printer friendly page

In January 2013, Will Morris, director of Global Tax Policy at General Electric Co., the US business giant, wrote a 'Dear Pascal' letter to Pascal Saint-Amans, head of the Center for Tax Policy at The Organisation for Economic Co-operation and Development (OECD), a Paris-based think-tank for the governments of 34 mainly developed economies, including Ireland. The letter was about proposed changes on what is termed 'Permanent Establishment' (PE), which would have the effect of "fundamentally changing" the tax rules that would apply to high tech companies in particular.

Will Morris' 14-page letter [pdf] was issued in his capacity as head of the Business and Industry Advisory Committee (BIAC) lobby group and the words 'concern,' 'concerns' and 'concerned' were used 30 times.

What has been dramatic since the Morris letter is the speed in which the sands moved under the feet of the beneficiaries of an out-of-control international tax system. Commitments from the leaders of the 19 leading developed and emerging economies in the G-20 to tackling massive corporate tax avoidance, will have the effect of  "fundamentally changing" the status quo for the international tax industry and the politicians that facilitate them.

While US companies are the most prominent in corporate tax avoidance and evasion, the US government is leading the international campaign against personal tax evasion.

In 2009, UBS, the Swiss banking giant, admitted that it aided US taxpayers to hide money abroad. UBS paid $780m in fines and turned over the names of more than 4,000 US taxpayers with accounts to settle US charges, effectively ending decades of Swiss bank secrecy. This week it was disclosed that more than half of Switzerland’s 300 cantonal banks (mid-size to small) have chosen to take part in a US disclosure programme to identify undeclared US assets under the terms of the Swiss-US tax deal signed in August.

Swiss banks are sending letters to current or former US clients warning that information about their accounts will be soon turned over to the IRS (US Internal Revenue Service).

In a special report last July on corporate tax avoidance, Reuters said the tactic of having a 'Permanent Establishment' (PE) in a jurisdiction other than a main area of business is termed by the OECD an "artificial avoidance of PE status," and it wants to change things so the international tax system more closely resembles economic reality. It aims to tweak the guidelines - - which countries including Germany, the UK and France want to change - - so that countries where companies make lots of money can claim a commensurate share of tax.

Reuters says  that many firms especially in tech, where they can easily operate across borders, use the tactic. Reuters analysed the accounts of the top 50 US software, internet and computer hardware companies by market capitalization and found that PE structures that help them avoid tax are currently used by 74% of them.

"Sixteen of the 20 biggest US software companies by market value, including Microsoft, Adobe and Citrix, do not declare tax residences for their main businesses in their major European markets, their accounts show. Instead, they report software sales in Ireland, Switzerland and the Netherlands, countries which have smaller populations and offer lower corporate tax rates."

OECD: Base Erosion and Profit Shifting

Top 5 US tech firms held $515bn in cash at end June 2013

Finfacts: US company profits per Irish employee at $970,000; Tax paid in Ireland at $25,000

Check out our subscription service, Finfacts Premium , at a low annual charge of €25

Reuters: The biggest tech tax havens

Said Business School, Oxford, April 2013: Pascal Saint-Amans (director, Centre for Tax Policy and Administration, OECD) illustrates how the OECD Base Erosion and Profit Shifting (BEPS) project studies whether and why the current corporate tax system allows for the allocation of taxable profits to locations different from those where the actual business activity takes place. The aim of the project is to provide complete and effective policies for countries to combat base erosion and profit shifting.

Said Business School, Oxford, April 2013: Will Morris (director, Global Tax Policy, GE) advocates incremental changes to the corporate income tax system to attain a more sustainable, sensible system. He also stresses the need for quick action and collaboration among business, governments and the OECD to address the problems in the current international corporate tax system.

Related Articles
Related Articles

© Copyright 2011 by Finfacts.com

Top of Page

Global Economy
Latest Headlines
Strong Swiss franc gloom deepens for exporters
Global investors shift focus to China; EM outflows surge to $1tn in 13 months
Global oil glut will continue into 2016
Stable growth momentum in OECD area but slowing expected in China
Prices for major food commodities in July lowest since September 2009
Global manufacturing in July weakest level in two years
US, China and UK lead top 25 target countries for foreign direct investment
Budget surpluses rare in developed countries from 1980s; Italy, France, Greece had none in 60 and 40 years
Singapore, London and Shanghai top cities for new FDI projects in 2014; Dublin in 11th place
Exchange rates shuffle as Dublin ranked 49th most expensive city; Paris at 46; Berlin at 105
Western consumer groups under pressure in China and India
Developing countries facing “structural slowdown” likely to last for years
OECD BEPS Tax Project: Amazon books UK sales in UK; Australia proposes up to 100% in penalties
Emerging Markets Index falls to 12-month low in May as manufacturing contracts
US and world economies slowing in 2015 — OECD
Global manufacturing production rose slightly in May; Trade flows weak
GDP growth in OECD area slowed to 0.3% in the first quarter of 2015
Only one quarter of workers worldwide have stable employment contracts
Automatic Exchange of Tax Information: OECD says countries won't be able to game system
Gates Foundation loses in Swiss family's shares coup
Minimum wage levels in OECD countries
Brent oil benchmark over $68 a barrel - up almost 50% in 2015
Global growth slows and manufacturing dips to 21-month low
Family-controlled firms dominate European business
Top 10 of world’s 250 largest consumer products companies account for 30% of sales
Nine of world's 20 fastest growing economies in Africa
Globalisation maybe stalling as trade growth remains weak
Global growth prospects uneven across major economies says IMF
Emerging markets growth lowest since 2009; Global growth at 30-year average
China's economic rebalancing hitting Latin American economies
New York, London, HK & Singapore top global financial centres index; Dublin recovers
Global growth in modest expansion from low oil prices/ monetary easing says OECD
Composite leading indicators point to positive change in growth momentum in the Eurozone
Global labour market trends portend paradise for some but uncertainty for many workers
Vienna remains top of World Quality of Living Rankings in 2015; Dublin at 34
Zurich and Geneva overtake Singapore to become world's most expensive cities
HSBC Switzerland and Falciani: How it happened
Global economic power to continue shift from advanced economies
Global food price index falls in January; Cereal output set for record
Global debt has risen $57tn or 17% of world GDP since 2007